Friday, January 22, 2010

Obama the Unilateralist

President Obama is making a habit of springing financial surprises. His latest plan to stop certain banks from trading on their own account or investing in hedge funds and private equity follows last week's announcement of a bank wholesale-funding levy. Despite repeated efforts by European governments to engage the U.S. in a global financial-overhaul agenda, both proposals appear to have been launched unilaterally without consultation with international partners.

Nonetheless, Mr. Obama's plans have had global repercussions. European bank stocks sold off following the announcement, with Barclays, the biggest decliner, down more than 10%. But this may be an overreaction. To the extent it is possible to guess what will emerge from Mr. Obama's two-paragraph plan, European banks don't look particularly vulnerable. Few take U.S. deposits or have access to the Federal Reserve discount window, making it hard to see how they could be caught by the new rules.

Many, including UBS, Credit Suisse Group, Deutsche Bank and Royal Bank of Scotland Group, already have largely exited proprietary trading. None are big investors in hedge funds, although some such as Deutsche Bank and Barclays continue to invest in private equity. Barclays probably is the most active in proprietary trading, but it is likely to account for less than 5% of group revenue, according to UBS.

Mr. Obama's plans to limit the size of banks and curb their use of wholesale funding, both through caps on funding and a proposed levy, may be a bigger threat to European banks, if adopted globally. True, there is no clarity on how these proposals might work in practice. Wholesale funding can take many forms, and how one measures market share of liabilities is unclear. But a global levy along the lines outlined by Mr. Obama could cost Barclays roughly half its forecast 2011 profit before tax, according to Credit Suisse.

Mr. Obama's vague plans have created uncertainty for the banking sector and, by fueling the populist backlash, heightened the regulatory risk for the whole industry. Mr. Obama's proposals may mark the start of a global debate on how to tackle the problems raised by too-big-to-fail banks, leading to a coherent international overhaul agenda.

Just as likely, Mr. Obama, by politicizing the debate and pinning his colors to one plan of action, may instead have pulled the rug from under his potential allies, making global agreement harder to achieve. No European country is likely to follow Mr. Obama's lead without global agreement. That would open up the prospect of new opportunities for regulatory arbitrage from which European banks may yet be winners.

Climategate was the tip of the non-melting iceberg. NOAA and NASA fudged the data too. I'm sure the Elephant Bar's lib apologists will think of something to explain this, like "The American Thinker is owned by Big Oil".

Click to enlarge1 of 1New York City Mayor Michael Bloomberg is less than thrilled with President Barack Obama's plan to limit the size of banks and their investments.Bryan Smith-Pool/Getty ImagesRelated Slideshows

Obama Calls For Tougher Bank Regulation(1/21/2010)President Barack Obama's demand Thursday that Congress clamp down on the size of banks and their investments got major blowback from New York City Mayor Michael Bloomberg, who said it could cause layoffs and hurt the city.

It's a clash between the president and the mayor. President Obama wants to whittle away at the size of the financial services industry.

"The American people will not be served by a financial system that comprises just a few massive firms," the president said.

But Mayor Bloomberg said the banks and Wall Street are part of the bedrock of the city's economy, and efforts to slash their business just means less tax revenue for the city, which brings up the dreaded "L" word.

"If that's the case then we'll have to lay off people because it will really hurt our industry," Bloomberg said.

The mayor was so upset about the move -- and a suggestion that Wall Street bonuses be put in escrow, which means the money wouldn't be spent here, wouldn't help the city economy -- he responded with a proposal of his own for members of Congress.

"Maybe we should hold back their salaries for a decade or so and see whether the laws they pass work out," Bloomberg said.

The mayor also demanded that the members of our congressional delegation go to the mat to protect the financial services industry, much like senators from Texas protect the oil industry.

New York City Mayor Michael Bloomberg is less than thrilled with President Barack Obama's plan to limit the size of banks and their investments.

Obama Calls For Tougher Bank Regulation(1/21/2010)

President Barack Obama's demand Thursday that Congress clamp down on the size of banks and their investments got major blowback from New York City Mayor Michael Bloomberg, who said it could cause layoffs and hurt the city.

It's a clash between the president and the mayor. President Obama wants to whittle away at the size of the financial services industry.

"The American people will not be served by a financial system that comprises just a few massive firms," the president said.

But Mayor Bloomberg said the banks and Wall Street are part of the bedrock of the city's economy, and efforts to slash their business just means less tax revenue for the city, which brings up the dreaded "L" word.

"If that's the case then we'll have to lay off people because it will really hurt our industry," Bloomberg said.

The mayor was so upset about the move -- and a suggestion that Wall Street bonuses be put in escrow, which means the money wouldn't be spent here, wouldn't help the city economy -- he responded with a proposal of his own for members of Congress.

"Maybe we should hold back their salaries for a decade or so and see whether the laws they pass work out," Bloomberg said.

The mayor also demanded that the members of our congressional delegation go to the mat to protect the financial services industry, much like senators from Texas protect the oil industry.

Doug said... Was my wargas experience in Basic Training torture?Should it be outlawed?

Fri Jan 22, 01:20:00 PM EST

Doug said... Should thousands of innocents die to preserve the "rights" of pathological terrorist scumbags?

Fri Jan 22, 01:22:00 PM EST

Doug said... Did you vote for BHO?If not, why not?"

Non-sequiters, red herrings, bluster. If you're actually interested in talking about the subject of torture, I'll be glad to do it. If you're only interested in your usual mindless venting, you waste my time.

Americans are rushing north of the border for healthcare "services". It was recently found out, by this reporter 1st hand, that in Canada massages with a happy ending, hand jobs and lapdances are all considered "health care" and thus Americans (with their Visa cards) are stampeding north to "get off"

Wow! It is now 14:35 and two threads have managed to survive, unsullied by you know what.

This could be a red-letter day.

As I said in an earlier thread, Mr. Obama may be tbe best thing to happen for the Republicans since the Mr. Clinton of 1992. By Jove, at his present rate of alienation, the hapless Pups may end 2012 with a super-majority and the presidency. That is not to imply that the Repubs would know what to do in such a case.

Mr. Obama is either tone deaf or a wholly unredeemable true believer in the Marxian model of social engineering.

Had Mr. Obama initially federalized the banks, given a $15,000.00 tax credit to all comers and sponsored accelerated depreciation, he might have made a difference. Instead, I believe 2010 may end as the worst year since the financial disintegration started.

"I believe 2010 may end as the worst year since the financial disintegration started."

Definitely a possibility that a double dip will occur! As to laying blame at Obama's feet...I dunno. Krugman says damn the torpedoes and plow full steam ahead with more stimulus. Protectionism and a monetary contraction seem more in tune with the sentiments of "the people".

As this is written, 20% of the commercial space in Atlanta is going begging.

I have 13 acres of the best commercial land in middle Georgia for sale. Yesterday, I talked with a friend my Sweetie (he's one of the most successful ophthalmologists in the South) about the possibility of a satellite office on the property. As things stand now, he gets tons of referrals from my area, who must drive all the way to Atlanta for service. His take, "I don't know anyone who is willing to risk investing in this climate. No one knows what the government is going to do next."

If you have seen the 2010 numbers on soon to be hitting the skids, "troubled" commercial real estate, you have no cause for optimism.

It certainly appears as if real estate has continued its downward trend in the US (Canada has fared remarkably well so far) and the Stock Markets have had a good run the last year but I believe, technically, the recession ended awhile back.

In any case I share your pessimism for the near term future. I hope we are wrong though 'cause I'm tired of the grind I'm experiencing in my business.

Whether the recession "technically" ended some time ago depends on whose numbers are used.

As you are aware, on the question of the actual unemployment level, the Feds are off by, what, 80%? Real unemployment/underemployment is close to 17-18%. Heretofore reliable business writers have resorted, in many cases, to fluff, contradicting themselves in mid-paragraph, literally.

My advice, were I asked, would be to develop a new business paradigm for the different reality we are going to experience for years to come. The rate of personnel attrition last year at my brokerage was in the range of 2-3% per month. Those without reserves and adaptability are falling by the wayside.

This will not be over until the fat lady sings. At the moment she isn't even near the theater.

Without resort to the accusations of either malice or duplicity, I do not believe that those at the helm fully understand the depth of the problem facing them. Most have never faced the threat of defeat and oblivion. In a bipartisan fashion, all would have us believe it possible to return to the halcyon days of yesteryear, with the skillful application of just the right stimuli. Ain't gonna happen; that dance is done.

None of this is to suggest that the US will become a third-world country in the next decade. I do suggest that our two decade long role as the sole power in the world is at an end. Our creditors are going to want repayment, and the vault is filled with IOUs.

Suppose I am Jack Bauer. At my mercy is a gentleman, who I know with absolute certainty knows the detonation code to an atomic device set for operation in downtown Seattle in two hours. It is my understanding that 200,000 citizens will be instantly vaporized, with an additional 500,000 to perish later of radiation poisoning.

Q takes a holiday up to the peninsula to research recipes for cooking carp. While he's gone an AQ inspired followup occurs over Detroit and its environs. Family and friends die. Q's income from Ford is cutoff when Ford's financial offices are vaporized in the conflagration. Foreign intelligence sources link the successful attack to the organization that sponsored the youth who demonstrated mental problems at Christmas.

Does Q insist that the right thing was done by Mirandizing the youth instead of using enhanced interrogation techniques?

In addition to the provisions which shall be implemented in peacetime, the present Convention shall apply to all cases of declared war or of any other armed conflict which may arise between two or more of the High Contracting Parties, even if the state of war is not recognized by one of them. The Convention shall also apply to all cases of partial or total occupation of the territory of a High Contracting Party, even if the said occupation meets with no armed resistance. Although one of the Powers in conflict may not be a party to the present Convention, the Powers who are parties thereto shall remain bound by it in their mutual relations. They shall furthermore be bound by the Convention in relation to the said Power, if the latter accepts and applies the provisions thereof.

So, if the conflict is with a non signatory, a signatory is not bound by the Convention until the nonsignatory agrees to be bound by it.

I do not recall Bin Laden having a delegate sign on to the Geneva Convention. I must have missed that. The Supremes chose to ignore historical precedent for the treatment of pirates of which al-Qaeda is a modern variant.

I didn't know this, just proves how inept the Bush Team lawyers really were.

Charges dismissed

On June 5, 2007, Hamdan and Canadian youth Omar Khadr, had all charges against them dismissed.[41][42][43] The judges presiding over their military commissions ruled that the Military Commissions Act did not give them the jurisdiction to try Hamdan and Khadr, because it only authorized the trial of "unlawful enemy combatants".

Hamdan and Khadr's Combatant Status Review Tribunals, like those of all the other Guantanamo captives, had confirmed that they were only "enemy combatants".

Not a single one of the Gitmo detainees was an "unlawful" enemy combatant, so judged by our own Tribunal.

Persons protected by the Convention are those who, at a given moment and in any manner whatsoever, find themselves, in case of a conflict or occupation, in the hands of a Party to the conflict or Occupying Power of which they are not nationals.Nationals of a State which is not bound by the Convention are not protected by it.

A serious argument can be made that Afghanistan under the Taliban was not a party to the Geneva Accords. And remember Hamdan v. Rumsfeld was decided by a narrow majority comprised of the usual internationalist, revisionist liberals.

Yes, it is the land of the land but it could just as easily be reversed by a narrow majority of conservative thinkers.

...That the relationship between the "High Contracting Parties" and a non-signatory, the party will remain bound until the non-signatory no longer acts under the strictures of the convention. ".

But then aQ is not a "Power" or a "Party", but a criminal gang. The countries that aQ operates from, Afpakistan, are both signatory.

Then there is the ever infamous Aticle 3, which was cited in Hamdan

Article 3 has been called a "Convention in miniature." It is the only article of the Geneva Conventions that applies in non-international conflicts.[1] It describes minimal protections which must be adhered to by all individuals within a signatory's territory during an armed conflict not of an international character (regardless of citizenship or lack thereof): Noncombatants, combatants who have laid down their arms, and combatants who are hors de combat (out of the fight) due to wounds, detention, or any other cause shall in all circumstances be treated humanely, including prohibition of outrages upon personal dignity, in particular humiliating and degrading treatment. The passing of sentences must also be pronounced by a regularly constituted court, affording all the judicial guarantees which are recognized as indispensable by civilized peoples. Article 3's protections exist even if one is not classified as a prisoner of war. Article 3 also states that parties to the internal conflict should endeavour to bring into force, by means of special agreements, all or part of the other provisions of GCIII.

All of our COIN and anti-terror operations are covered under Article 3, so says the SCOTUS, and they know, fer sur.

combatants who are hors de combat (out of the fight) due to wounds, detention, or any other cause shall in all circumstances be treated humanely, including prohibition of outrages upon personal dignity, in particular humiliating and degrading treatment. The passing of sentences must also be pronounced by a regularly constituted court, affording all the judicial guarantees which are recognized as indispensable by civilized peoples. Article 3's protections exist even if one is not classified as a prisoner of war.

When they bomb your embassies, when they attack your landmark skycraper twice, destroying it the second time and killing over three thousand of your citizens, when they attack your warship, killing and wounding sailors, what are you supposed to do?

"Senate Democrats proposed Wednesday to increase the nation's debt limit by a record $1.9 trillion, but were scrambling to line up the votes for the increase, which would authorize the Treasury to borrow enough money to cover the government's bills through the rest of the year.

The proposed increase would raise the legal cap on borrowing to $14.3 trillion, which would increase the nation's accumulated debt to about the size of the overall U.S. economy."

Take two lap dancers with a popular Thursday-night lesbian floor show.

Add one wealthy Mexican fabric trader.

Put them all together on a stained bed in the "Champagne Room" of Big Daddy Lou's Hot Lap Dance Club on West 38th Street and stir it all up with the news that the wealthy fabric trader is really an undercover vice cop.

Magnificent Ronald and the Founding Fathers of al Qaeda

“These gentlemen are the moral equivalents of America’s founding fathers.” — Ronald Reagan while introducing the Mujahideen leaders to media on the White house lawns (1985). During Reagan’s 8 years in power, the CIA secretly sent billions of dollars of military aid to the mujahedeen in Afghanistan in a US-supported jihad against the Soviet Union. We repeated the insanity with ISIS against Syria.